Enforcement of the federal antitrust laws occurs through the actions of government agencies and the lawsuits of private parties. In this chapter, I set out the mechanics of these enforcement processes and consider whether the level of enforcement is optimal from an economic perspective. I also examine some predictability and fairness issues generated by the current enforcement framework.

If the antitrust laws were designed to provide the socially optimal level of deterrence, then they would discourage only those acts that reduce society's wealth. I will say that the antitrust laws overdeter if they discourage conduct that on balance increases society's wealth. Similarly, I will say that the laws underdeter if they fail to discourage conduct that reduces society's wealth.

I conclude, in this chapter, that the penalty provisions and the rules governing damages, when viewed in isolation, are likely to underdeter covert anticompetitive activity, such as price-fixing. However, it is difficult to say whether the antitrust laws, viewed in their entirety, underdeter or overdeter. The overall picture is complicated, because while some features of the enforcement structure suggest the laws underdeter, other features suggest the laws may overdeter.

OPTIMAL ENFORCEMENT THEORY

Assume that the objective of the antitrust laws is to maximize consumer welfare. What is the appropriate fine for an antitrust violation? That question received its clearest answer in an article by William Landes, who relied on the enforcement theory of Gary Becker.